Credit Card Processing: Everything You Need To Know

1. Credit Card Processing: Everything You Need To Know As a merchant, your job is to sell goods and services to a customer at a fair price. Back in the day, cash payment was all there was. But in today’s times, things are changing. And if you want to make sure your business survives competition and thrives, you need to incorporate all the new ways of accepting payments. One of these methods is credit card payments through a credit card processor. And most businesses have managed to adjust to it very easily. But when a customer swipes his or her credit card, all we see is that it takes a few seconds to complete the transaction, and the payment is then deposited in your merchant account. But have you ever given a thought to how does an online credit card processor work? If not, you are in the right place. In this article, we are going to discuss the process of credit card processing. The parties involved in the process are- Customer Merchant Card association Acquiring bank Issuing bank Payment processor Payment gateway Following are the steps of credit card processing The customer purchases an item and swipes a credit card for payment The card gets recognized and the terminal contacts the processing company for authorization The transaction is then submitted by the payment processor to the issuing bank, via the card association. An authorization request is made to the issuing bank. The issuing bank decides whether to approve or decline the transaction. There are numerous reasons for a transaction to get declined, like, lack of credit, if past payment is due, or if the account isn’t active. The issuing bank then sends the approval or denial to the card association, the merchant bank, and then the merchant. The transaction is complete with the transfer of the amount to the merchant. This is credit card processing in a nutshell.